A credit card is generally known as a payment card issued to a customer for purchasing goods and services or obtaining cash against a line of credit established by the issuer. It not only enables a customer to make cashless payment throughout the world, but also offers the financial flexibility to repay the credit extended either at once or on an installment basis. Apart from being a convenient financial instrument for the customers, credit cards or credit accounts also prove to be a powerful revenue-generating tool for the card-issuers. Routinely, a card-issuer can collect fees from merchants that honor the credit card in their transactions. The issuer can also collect finance charges from customers who carry unpaid balance in their accounts.
In recent years, card-issuers have been offering various types of promotional programs to attract new customers or to increase transaction activities among existing customers. For example, most banks promise a low introductory interest rate to new card members. Many offer low-interest-rate balance transfer opportunities by providing customers with balance transfer coupons or convenience checks. These promotional programs typically lower the annual percentage rate (APR) for a particular portion of a customer's account balance for a certain period of time, thereby encouraging the customer to spend more or borrow more against his or her available credit. As a result, the customer's account balance is typically subdivided into two or three parts, each being subjected to a different APR. For example, the account balance resulting from regular purchases may have a first APR of 9.99%, the balance resulting from cash advances may have a second APR of 19.99%, and the balance transferred from another card may have a third APR of 6.99% for 6 months. Here, the first and second APRs may have been specified in the card member agreement while the third APR may be a promotional rate valid for a limited time period.
A number of problems exist in traditional credit account management and promotional offering. For example, traditional credit accounts are usually limited to either a two-tier configuration (i.e., without any promotional APR) or a three-tier configuration (i.e., with only one promotional APR). Therefore, existing credit account systems typically lack the ability to offer multiple concurrent promotional APRs to a single account or to process transactions and payments based on multiple concurrent promotional APRs. This deficiency can significantly limit the card-issuer's ability to effectively promote a large array of products or services to each customer. Moreover, with the traditional two-tier or three-tier credit account configuration, there is a fixed payment arrangement specified in an initial card member agreement, which does not allow customer input on the payment allocation. Further, traditional credit account systems lack the ability to retroactively adjust payment allocation or re-calculate fees and charges.
Other problems and drawbacks also exist.
In view of the foregoing, it would be desirable to provide a solution for managing credit accounts and promoting credit sales which overcomes the above-described deficiencies and shortcomings.